NZ apple program keeps exporters holding on to key markets
New Zealand's apple industry may have run at a NZ$5.2 million (US$4.2 million) loss last year, but new research claims the deficit would have been significantly larger if it weren't for the Apple Futures program.
A New Zealand Institute of Economic Research (NZIER) report says the program brought scientists and growers together to find ways to reduce sprays and pesticides with export-quality fruit, helping the industry keep its presence in the European market.
"In just four years, the apple industry earned up to an extra NZ$113 million (US$90 million) by reducing chemical residues in one-tenth of the maximum set by the European Union," says report author, NZIER principal economist Bill Kaye-Blake.
"The number of permitted agrichemicals in the E.U. has fallen from around 1,100 to around 300, according to Pipfruit NZ. At he same time, although the European regulators set a Maximum Residue Level (MRL), the pesticide residue thresholds set by some European buyers are far below these MRLS.
"These thresholds might be 33% to 80% of E.U. regulations, with no more than three active ingredients allowed per residue test. Supermarkets are now using low residues as a point of difference – a marketing tool."
The NZ$113 million figure relates to the four calendar year 2008-11 period, under a worst case scenario of high price sensitivity and a 100% closure for New Zealand's apples in the European market.
Even if consumers were not price sensitive and only 25% of the European market was closed off because of residue issues, NZIER calculates the program still would have saved the industry NZ$15 million (US$12 million) over the period.
Based on the range of possible outcomes in the absence of the program, NZIER estimates the total gains per year were between NZ$25-35 million (US$20-28 million), which is around 7-10% of revenue.
Without apple futures, Kaye-Blake claims the industry would have run at a loss of NZ$32.9 million (NZ$26 million) in 2011.
"United Kingdom and German buyers are influential buyers, setting trends that other markets follow.
"New Zealand’s position in these premium markets has slipped in recent years. Contributing to the decline is increased competition from other producers, particularly in South America, and increased market access requirements in the European Union."
The Apple Futures program involved developing guidelines for "ultra-low residue" fruit, focusing on Europe's preferred apple varieties, including fruit residue testing regimes, a database of residues and spray diaries, grower discussion groups, technical advice from Pipfruit NZ and Plant & Food Health, as well as seminars that included growers, scientists, industry consultants and suppliers.